Correlation Between Zijin Mining and BlueScope Steel
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and BlueScope Steel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Zijin Mining and BlueScope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zijin Mining Group and BlueScope Steel Limited, you can compare the effects of market volatilities on Zijin Mining and BlueScope Steel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Zijin Mining with a short position of BlueScope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and BlueScope Steel.
Diversification Opportunities for Zijin Mining and BlueScope Steel
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zijin and BlueScope is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and BlueScope Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel and Zijin Mining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Zijin Mining Group are associated (or correlated) with BlueScope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueScope Steel has no effect on the direction of Zijin Mining i.e., Zijin Mining and BlueScope Steel go up and down completely randomly.
Pair Corralation between Zijin Mining and BlueScope Steel
Assuming the 90 days horizon Zijin Mining Group is expected to under-perform the BlueScope Steel. In addition to that, Zijin Mining is 1.23 times more volatile than BlueScope Steel Limited. It trades about -0.05 of its total potential returns per unit of risk. BlueScope Steel Limited is currently generating about 0.18 per unit of volatility. If you would invest 1,220 in BlueScope Steel Limited on September 1, 2024 and sell it today you would earn a total of 140.00 from holding BlueScope Steel Limited or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. BlueScope Steel Limited
Performance |
| Timeline |
| Zijin Mining Group |
| BlueScope Steel |
Zijin Mining and BlueScope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and BlueScope Steel
The main advantage of trading using opposite Zijin Mining and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, BlueScope Steel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BlueScope Steel will offset losses from the drop in BlueScope Steel's long position.| Zijin Mining vs. Astral Foods Limited | Zijin Mining vs. GALENA MINING LTD | Zijin Mining vs. CN MODERN DAIRY | Zijin Mining vs. TYSON FOODS A |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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